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2014 (5) TMI 525
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.... for Biscuits. Having completed the export obligation, on 02.07.2013, the exporter (authorization holder) obtained endorsement of transferability from the licensing authority on the said DFIA, and the transferrable DFIA was transferred to the appellant. The appellant being a bona fide transferee sought duty free clearance of Amygluten 160 (wheat gluten) imported by it. The same was denied by putting conditions. Appeal filed by the appellant before Commissioner (Appeals) was dismissed. 3. The following background facts are relevant for deciding the issue:- 3.1 The appellants presented a Bill of Entry no. 4618667, dt. 12.2.2014 for duty free import of 'Wheat Gluten', under a Transferrable DFIA permitting duty free import of 'Wheat Flour', against export product 'Biscuits' which were already exported and transferability endorsed on the license. According to the appellants, Amygluten (Wheat Gluten) is superfine wheat flour. It is also called vital wheat gluten which is nothing but refined Wheat Flour. As per the appellant the imported Wheat Gluten is covered under the description of Wheat Flour eligible for duty free clearance, and is required for or capable of use in the m....
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....nbsp; (iii) The item is not listed in the sensitive list so as to require matching of the technical specification of the imported input with that used in the resultant product as stipulated in the first proviso to condition no. (1) of the notification no. 98/2009-Cus.dt 11.9.2009. (iv) Being a transferee of the DFIA, this requirement is not applicable to the importers to declare the contents of the inputs in the resultant product for availing the duty free benefit. DFGT Policy Circular no 72/2008 dated 24.3.2009 and CBEC Circular 46/2007-Cus dated 20.12.2007 fully support the claim of the appellant. In Policy Circular dated 24.3.2009 it was clarified that:- 2. The matter was examined in detail and it has been decided to clarify to all concerned that since the objective of SION is to allow duty free import of the inputs which are actually used or are capable of being used in the export product, the exporter has the flexibility to import the alternative input / product mentioned in the SION. In the CBEC Circular dated 20.12.2007 it....
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.... amended entry read as Biscuits and the corresponding input no. 1 was amended to read as Wheat Flour. Input no. 2 was amended to Cane Sugar and it was specifically noted that:- Note:- 1. Import of Lactose / Mannitol / Sodium Saccharin and other Articficial Sweetening Agents is not allowed as substitute inputs against import items No. 2. This has also been spelt out in Policy Circular No. 13 dt. 31.01.2011. No such Note however was inserted for restricting import of Wheat Gluten against Import Item no. 1 i.e. 'Wheat Flour'. (ix)) The Jt.DGFT Hyderabad has in his letter dated 30.07.2007 clarified to the Commissioner of Customs, Chennai that wheat Gluten Flour is a technical characteristics of wheat Flour. The communication dated 30.10.2013 from the Ministry of Food processing to the DGFT New Delhi annexed to the appeal inter alia says that Gluten Flour is wheat flour with most of the starch removed leaving 70% of proteins in it. (ix) Consequently even though the appellant could not produce the evidence to show that whether or not Wheat Gluten was actually used in the manufacture of the Exported biscu....
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....PN 35 declaring therein that the inputs actually used shall alone be imported. In the absence of the undertaking the duty free import is not permissible. 6. Both sides were heard at length. We have carefully perused the records before us. Our attention was drawn by both sides towards various Notifications, Circulars, Public Notices and precedents which we have taken into consideration. The appeal has been taken for hearing out of turn for the reason that the case relates to a live consignment and the issue is of recurring nature. 7. We have considered the following notifications, public notices and policy circulars- Notifications issued under section 5 of FTDR Act: 1. DGFT's notification no.31 (RE-2013)/2009-14 dated 01.08.2013 amending the Foreign Trade Policy with effect from 01.08.2013, by insertion of para 4.1.15 in FTP, and amending para 4.2.3 by adding phrase '4.1.14 and 4.1.15' in place of 'and 4.1.14' 2. Notification 48 (RE-2013)/2009-14 dt. 30.10.2013, amending Para 4.1.15 of the Policy by amending para 2 of earlier Notification 31 of 1.8.2013. DGFT Public Notices: 1. DGFT Public Notice No. 93(RE-2010/2009-14) dated 01.02.2012 amending SION E-5, insert....
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....at Flour in which most of the starch is removed, and even the office of Jt.DGFT, at Hyderabad has clarified in a communication dated 30.7.2007 that Wheat Gluten Flour is nothing but Wheat Flour with specific technical characteristics, and thus eligible for import against Wheat Flour and merits exemption under DFRC scheme. The Commissioner (Appeals) in the instant case has therefore clearly erred in ignoring the settled position. These decisions and clarifications backed by technical literature which are available on record, leave no room for doubt that Wheat Gluten under import is Wheat Flour with specific technical characteristics. Whether Policy Circular 13 dt 31.1.11 can restrict the scope of inputs in SION no. E-5- 10. The Policy Circular no. 13 dated 31.1.2011sought to suggest that inputs allowed in SION no. E-5 do not include wheat gluten as alternative input against import item no. 1 which included Flour. The said Circular also suggested that import of Lactose / Fructose /Maltose / Mannitol / Artificial Sweetening Agents is not to be allowed under DFIA as alternative inputs against Item no. 2. This Circular was issued without any amendment in the SION norms. Subsequent....
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.... used as an input in the manufacture of crackers / puff biscuits. 11. Once it is concluded that the imported goods are covered under the scope and ambit of permissible item 'Wheat Flour', and also that it was capable of being used in the manufacture of 'Biscuits', it is to be seen whether exemption could still be denied on the ground of nexus and Public Notice no. 35 dated 30.10.2013. 12. In Aditya Birla Nuvo Ltd vs CC, 2010 (249) E.L.T. 273 (Tri. - Bang.), while relying on various precedent decisions of higher judicial foras, this Tribunal held as under- 8.6 We now take up next issue framed by us i.e., issue (g) for discussions. (g) Whether the appellant has failed to establish nexus as envisaged in advance licensing scheme? The instant case relates to imports under license issued for actual user condition by the license to the license holder. It is no longer res integra and is a settled law that nexus between the imported materials and export product, is not required to be proved fresh by the transferee/licensee once imported material is otherwise covered by the advance license and the benefit....
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....enefits. In the instant case, the specifications of the goods imported are squarely covered by the advance license issued by the licensing authority. The appellant has thus established a nexus as envisaged by the advance licensing scheme. We do not find any cogent reason to charter a different course in the instant case. Apart from the DGFT's Circular 72/2008 and CBEC's Circular 46/2007-Cus, relevant portion of which is extracted above, which have been according to us rightly relied upon by the appellants, we note that it is settled law that when the import is against the transferred DFIA (Licence) it is not necessary to establish that the material imported was actually used in the export product unless the resultant product figures in the sensitive list and the theory of broad nexus being settled by Apex Court. 13. Regarding the Public Notice no. 35 dated 30.10.2013, it is seen that it seeks to enlarge the scope of Notification no.31 (RE-2013)/2009-14 dated 01.08.2013 amending the Foreign Trade Policy with effect from 01.08.2013, by insertion of para 4.1.15 in FTP, and amending para 4.2.3 by adding phrase '4.1.14 and 4.1.15' in place of 'and 4.1.14' . In Union of India vs As....
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....oreign Trade Policy stipulates that DFIA shall be issued in accordance with Policy and procedure in force on date of issue of Authorisation. We are therefore not impressed by the submission of the Revenue that the position as prevailing on the date of clearance would govern imports under valid licence. The Appellant, who are transferee, cannot be compelled to establish that wheat gluten was actually used in the manufacture of the biscuits which have been exported against the DFIA. The provisions of Notification No. 31 dated 1.8.2013 (as amended) will not be applicable to such DFIA issued on 30.05.2012 i.e. issued prior to amendment. Consequentially any policy circular or public notice, if seeks to deny the exemption which is otherwise available in the instant imports, will also have no applicability for the same reason. In Commissioner v. Global Exim, 2010(259)A 139 (Bombay High Court), it was observed that- 4. According to the Revenue, a co-relation of technical characteristics, quality and specification is required to be established in respect of bearings sought to be imported that the b....